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Airbus Stems Cash Losses, Warns of Delayed Recovery

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Published: Monday, 16 November 2020 10:18

World’s largest plane maker has moved back its narrow body ramp up plans by three months

Airbus stemmed an outflow of cash in the third quarter as it learned to navigate an industry reeling from the pandemic, but also said the aviation market’s recovery would start later than initially forecast.

The world’s largest plane maker posted a positive free cash flow of €600 million, equivalent to $705 million, as it started delivering more planes. Amid a sudden drop in traveler demand, airlines have moved to delay, defer or cancel orders for new jets. Airbus and rival Boeing Co. have reduced production levels to adjust.

However, Airbus was making more planes than it could deliver, hitting cash flow, as airlines typically pay most of the cost of a new jet upon delivery. Airbus still has finished planes awaiting delivery, but the company was able to reduce the number by around 10 aircraft to 135.

Airbus burned through €4.4 billion in each of the first two quarters of the year. It set a target for free cash flow to be at least break even in the fourth quarter, its first guidance since the start of the pandemic.

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The Airbus A320 Has Become Aviation’s Last Refuge

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Published: Monday, 09 November 2020 10:18

The European plane maker will increase production rates of the short-haul workhorse next year, throwing a lifeline to a battered industry

When it started flying in 1987, Airbus’ A320 seemed like a moonshot project from an upstart plane maker, with little chance of challenging the supremacy of the Boeing BA 2.97% 737 on short-haul flights. Skip to 2020, and it is one of the few products keeping the aviation industry afloat.

This week, Airbus reported positive cash flows for the third quarter as plane deliveries resumed. The European company shipped 145 commercial aircraft, compared with 28 for its U.S. rival Boeing. While the Airbus number was still down 20% from a year earlier, it is an impressive figure in a pandemic. Global air traffic remains stuck at half of 2019 levels, giving airlines little reason to take on planes.

The workhorse A320 family stands behind Airbus’ resilience. At this pace, it could amount to 63% of combined deliveries from both plane makers this year, compared with 39% in 2018—before the grounding of Boeing’s troubled 737 MAX. Airbus Chief Executive Guillaume Faury confirmed reports that A320 production rates will start to ramp up from 40 to 47 a month in the second half of next year.

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Airlines’ New Pricing Strategy: Buy One, Get One Free

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Published: Tuesday, 03 November 2020 15:17

Airlines give away seats as they try to stop the cash burn and make travelers feel comfortable flying again

Airlines are resorting to a new tactic in navigating the pandemic-inspired collapse in travel: They are giving seats away.

Alaska Air Group Inc. ALK +2.77% ran 48-hour sales in August and September, offering an entire three-seat row for the price of a single ticket. Europe’s biggest airline, budget carrier Ryanair Holdings RYAAY +3.09% PLC, offered 2-for-1 specials for flights through mid-December. Southeast Asia’s AirAsia brand earlier this year sold “unlimited passes,” allowing customers in some markets to travel as much as they wanted for a few months.

The deals can drum up demand and get travelers comfortable with flying again. They are also keeping at least some cash coming in the door, as airlines keep much of their fleets parked. Alaska Airlines usually runs 10 to 12 big promotions a year; it has recently been offering three a month.

Alaska Airlines was already keeping the middle seat open for social distancing. Its buy-one-get-one-free offer allows a pair of passengers traveling together to get their own row for the price of a single seat. On days when the Seattle Seahawks play at home, the airline, which is based in that city, offers discounts of as much as 40% depending on how many touchdowns quarterback Russell Wilson makes. Overall during the third quarter, Alaska Airlines said ticket prices were down 17%.

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The Jumbo Jet Was the Pinnacle of Air Luxury—Now Its Days Are Numbered

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Published: Monday, 05 October 2020 14:47

Boeing and Airbus are winding down production of the 747 and A380, planes that ended up being too big for their own good

It’s time to eulogize the passing of the 747 and A380, engineering marvels that defied gravity, tantalized travelers with luxurious cabin space and opened intercontinental travel to the masses by making cheap fares plentiful.

The pandemic sped up their demise, which seemed inevitable regardless. There’s little doubt air travel will see weaker demand for several years, which is a killer for enormous airplanes that require strong demand to fill seats. The losses will be mourned by many travelers, and will be particularly hard on airplane aficionados for whom these incredible machines represented jet nirvana.

But from the beginning, both jumbo jets were too big for most markets, and the only way airlines could fill them was by offering very cheap fares. And while travelers profit from cheap fares, airlines don’t.

Boeing announced at the end of July that it would discontinue 747 production in 2022 when it finishes building the last 15 freighters on order. The last passenger version of the 747 was delivered in 2017, though two planes built for an airline but never delivered will become Air Force One presidential transport.

Almost all 747s at passenger airlines are grounded, according to Cirium, an aviation data and analytics company. Several big airlines that fly the older 747-400 say those planes are done. The newer 747-8, flown by three airlines, likely will return to service. There are just 35 of those.

PAST GLORY FOR THE `QUEEN OF THE SKIES’
Airlines have grounded most 747s during the pandemic, and most won’t ever fly passengers again. Here’s a breakdown.

Airlines recently saying their 747s won’t return: British Airways, Qantas, KLM and Virgin Atlantic

Airlines that previously retired passenger 747s: United, Delta, Cathay Pacific and Singapore

Airlines with the newer 747-8: Lufthansa, Korean Air and Air China

Airbus announced in February that it will end production of its superjumbo A380 in 2021, again after the last remaining dozen or so airplanes on order are delivered. You might say airlines announced the end of the A380 long ago because big orders just never materialized, except at Emirates. “The A380 is not only an outstanding engineering and industrial achievement. Passengers all over the world love to fly on this great aircraft. Hence today’s announcement is painful for us,’’ Airbus said when announcing the end of production. “A380s will still roam the skies for many years to come.”

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